Subsidy Disbursement

Project Start and 1st Disbursement

Once the Project has met the requirements as per the letter of commitment, the project would be eligible to receive 40% of the Total Subsidy receivable as per the Subsidy Delivery Policy. The subsidy will be paid against bank guarantee to the Pre-Qualified Construction (PQConstr) companies upon approval from the Developer, or directly to Developer in case of MSW plants, with a construction approval letter from AEPC. 

Any Environmental and Social mitigation measures required to be implemented by this stage shall have been implemented in order for the project to start and qualify for subsidy at this stage. Please refer to the “Environmental and Social Monitoring Guideline” documents (available from the downloads page). AEPC shall verify compliance with these measures.

For projects in which a technology new to Nepal is being implemented and an international Technology Provider may be used due to expertise in a particular technology, the Technology Provider shall participate in partnership with a Pre-Qualified Construction Company. The Developer and the Pre-Qualified Construction Company are encouraged to tie the Technology Provider down contractually to the Performance Guarantees. 

2nd Disbursement

The Project shall demonstrate that the plant meets the Performance Guarantees as stated in the DFS and as per the “Biogas Plant Commissioning Testing and 1-Year Guarantee Monitoring Guidelines” (available from the downloads page). The Pre-Qualified Construction Company shall notify AEPC when the plant is ready to be monitored and measured against the Performance Guarantees. AEPC will monitor performance through approved Third Party Commissioning Teams following the guidelines and verify whether the project complies with the Performance Guarantees stated in the DFS.

Any Environmental and Social mitigation measures required to be implemented by this stage shall have been implemented in order for the project to qualify for subsidy at the commissioning stage. AEPC shall verify compliance with these measures.

If the Performance Guarantees and other criteria set in the guidelines are met, 50% of the Total Subsidy Support will be channeled to the Pre-Qualified Construction Company upon verification from AEPC and approval by the Developer against bank guarantees. This will take place once a “Guarantee Certificate” has been signed, as per the “Biogas Plant Commissioning Testing and 1-Year Guarantee Monitoring Guidelines”, which contains a clause for the three parties involved in the project: the Developer, the Pre-Qualified Construction Company and AEPC. All three signatures shall be in the document to confirm the success of the Performance Testing. Funding for the subsidy will be sourced from the NRREP budget.

If the Performance Guarantees are not met, the Project shall be given 180 days to rectify any faults or make any relevant modifications to the process in order to meet the Performance Guarantees. AEPC will resume monitoring upon notification from the Developer to check if the Performance Guarantees are met. If the Performance Guarantees are not achieved within the 180-day period, the project will lose priority to receive funding from SREP against other compliant projects. The project, however, shall not be automatically disqualified for funding, and both the Pre-Qalified Construction Company and the Developer are encouraged to work towards achieving the Performance Guarantees as soon as possible, even if outside the 180-day period, as the funds will be disbursed on a first come first served basis. If funding is available by the time the Pre-Qualified Construction Company and the Developer notifies AEPC of the project readiness to meet the Performance Guarantees, the project will still be eligible for funding upon successful commissioning. Upon successful commissioning of the project, AEPC will submit a Replenishment Claim for SREP to refund 20% of the Project Cost to the NRREP budget as follows:

SREP contribution will comprise 20% of the Estimated Project Cost approved at the DFS stage, or 20% of the Actual Project Cost (APC), whichever is lower, subject to a maximum limit of the total amount of subsidy disbursed by AEPC as per their Subsidy Delivery Policy for the year 2013. No revision in SREP contribution will be considered / accepted in view of - i) cost overruns due to delay in project execution / successful completion; and ii) revision in quantum of subsidy by AEPC in future.

The Actual Project Cost is defined as follows: “Post project completion actual cost of all the items as defined in the Target Project Cost supported by justification of all payments and expenses as defined in the TPC”.

In order for the project to receive the subsidy from AEPC, the Developer shall provide AEPC with evidence to support all actual expenses that form the basis of the Actual Project Cost, including justification for all payments.

Project Completion, Monitoring and 3rd Disbursement

The Pre-Qualified Construction Company must demonstrate that the plant has operated successfully for 1 year after successful commissioning and complied with the criteria set in the “Biogas Plant Commissioning Testing and 1-Year Guarantee Monitoring Guidelines” document, regarding equipment reliability, biogas and/or electricity production. The “1-Year Guarantee Agreement” document requires the signatures of AEPC, the Developer and the Pre-qualified Construction Company to verify that the 1-Year Guarantee period has been successful. AEPC will verify whether the conditions have been met.

If the 1 Year Guarantee conditions have been met, 10% of the Total Subsidy Support shall be disbursed to the Pre-Qualified Construction Company.

If the 1 Year Guarantee conditions have not been met according to AEPC´s verification, no subsidy shall be disbursed to the Pre-Qualified Construction Company.

Any Environmental and Social mitigation measures required to be implemented by this stage shall have been implemented in order for the project to qualify for subsidy. AEPC shall verify compliance with these measures.

Impact Assessment and Lessons Learned:

AEPC will perform regular structured reviews during the duration of the Program implementation period in order to monitor the satisfactory performance of the projects supported from a technical, financial, commercial, environmental, and social perspective, drawing lessons learned as required.